The U.S. healthcare sector is faced by eminent collapse because it is unsustainable and indefensible (Gerald 2008). The imminent collapse is clearly shown by the following facts: first the universal coverage is not affordable and hence the system leaves 47 million Americans uninsured. This is because high costs of insurance cause instability on the voluntary, private, and employer based system because increases in cost means purchasers limit coverage or increase the amounts they charge their workers hence the workers choose not to be covered.

The rules of enrollment in government and private programs result in millions of Americans going without health care coverage, including children. The U.S. Census Bureau estimates that 45.7 million Americans (about 15.3% of the total population) had no health insurance coverage at some point during 2007(Us census Bureau, 2008) .This was mainly due to affordability constraints.

Second the U.S. system is in fact a not homogeneous, it is an incoherent pastiche that has long repulsed reforms sought by private and public stakeholders and the last evidence is the extremely high health care costs Separate legal entities offer health care service in United States. United States is the nation that spent highest amount of money and resources for its healthcare requirements. The costs on pharmaceuticals and other expenses are so high that a good percent of the GDP is streamed to the health care sector. United States spends 16%of it s annual gross domestic product on health care compared to a country like France which is capable of providing cover for its population at only 11%GDP (Gerald 2008). State budget deficits and federal cuts result in reduction in Medicare and Medicaid programs and employees are devoid of employment-based benefits.

The out of pocket health care expenditures represent consumers’ rapidly growing burden both in terms of their fast growing size and the unavailability of financing options to address them. while there re many finance companies which re ready to provide credit for discretionary medical expenses , the funding sources available to consumers who need money to pay for necessary medical procedures re few. These consumers re often forced to rely on regular credit cards after which they turn to other sources like retirement savings , home equity, friends and family when they reach their credit limit. Flexible spending accounts and health savings accounts have assisted consumers save money to meet their medical expenses to a limited extent however the need for more solutions far outweighs the capacity of this program. Retail clinics, which offer affordable basic medical services in a retail setting, have been of help somewhat but they cannot address high cost medical treatments related expenses.

A study carried out to evaluate of the effect of a prospective payment method on hospital charges and the mixture of services offered to a group of Medicare patients with mental disorders who were treated in general acute care hospitals in Maryland showed that per case reimbursement have the advantage of providing incentives to minimize the cost one should pay to the hospital however this reduction in cost is possibly offset by higher charges upon readmission or by higher readmission rates . This study focused on per case reimbursement, in which hospitals are guaranteed a level of grand revenue depending on the number and case mix of discharges then evaluated its impact on hospital charges during an index admission and non- hospital and hospital charges for period of three month after the index admission. The authors concluded that there was not significant impact of the per case payment method on the grand cost of mental health care over a specified period of time but the payment method seemed to influence the pattern of health care.